8. EBUBE NSOFOR

1. INTRODUCTION

Beneath the sub-soil of the African continent lies the richest reserves of mineral

resources in the world, with a concentration of over 30% of the earth’s remaining

mineral resources. But despite this strategic position the extractive sector in Africa is

derided by fundamental challenges- which commentators perceive in numerous, but

consistent ways- making it difficult for resource wealth to impact positively on the

masses.

Derivatives of extractive resources wealth in Africa is further limited to minerals in their

raw state as secondary production into higher value output is largely carried out

outside the continent, depriving countries the opportunity to maximize their resources

and diversify their economies in such a way that ensures beneficial utilization by future

generations and sufficient linkages with other economic sectors.

This paper purposefully focuses on key trends and institutional approach to mineral

resource governance and sustainability, and how policy-makers can convert mineral

prospects to value-added economic benefits through the correct application of

effective governance and coordinated management of the economy.

2. ESSENTIALS OF SUSTAINABLE GOVERNANCE, MULTI-SECTOR

PARTNERSHIP AND VALUE-ADDED MANAGEMENT OF MINERAL

RESOURCES IN AFRICA

An interesting historical perspective to Africa’s resource governance woes describes

the present governance regime in most resource-dependent countries in Africa as an

over-centralized, top-down structure rooted in colonial vestiges.1 The colonialists’ main

1 Yemi Oke, Nigerian Energy & Natural Resources Law (Lagos: Princeton & Associates Publishing Co.

Ltd., 2016) 3

objectives of resource exploitation were economically motivated, with little or no regard

for the local resource owners and the natural world in which they lived. Unfortunately,

the socio-economic and political structures of the post-colonial era in Africa is

patterned after the colonial models, resulting in the rise of new cultural orientations.2

The first step to conceiving effective strategies for sustainability and responsible

governance within the extractive sector is centered on the fact that such strategies

must be a reflection of the usages and expectations of the resource owners. To this

end, community participation becomes a key principle in resource governance, from

which other objectives including sustainability and value-addition are based.

Policy-makers must incorporate community participation in all layers of governance;

from ownership rules and participation to accountability, fiscal allocations,

environmental compliance and dispute resolution. Notable manifestations of

sustainable resource governance are deducible from laudable efforts of many

countries, but there is more to achieve. Transparency and accountability efforts must

take into account social and environmental impacts, in addition to financial

transparency there is need for policy coherence through ensuring that decisions about

mining should not be made in isolation from decisions on other development issues.3

This underscores an extended scope in ideal policy-making situations including

increased attention to value-added resource management and the promotions of multi-

sectorial ties.

2 Id, at 4

3UNEP. 2019. ‘Mineral Resource Governance in the 21st Century’ https://uongozi.or.tz/wp-

content/uploads/2018/11/Enhancing-Value-Addition-in-the-Extractive-Sector-Africa.pdf

Stimulating Value Addition and Promote Linkages with Other Sectors of the Economy

Much of the integral challenges of the extractive sector in Africa is synonymous with

the dangers of remaining a primary minerals producer, characterized by high

susceptibility to price volatility, under-developed economies and external interference

with economic sovereignty. An analysis of Ghana’s commitment to establish an

integrated aluminium industry in line with value-added management of the country’s

rich bauxite reserves discloses a multiplier effect paradigm and provides a key study

of the transformative role of value addition. At the basic level, bauxite is traded at

around USD 40-60 per metric ton (MT). But moving up the value chain, alumina

fetches around USD 400-600+ per MT, while primary aluminium is trading at near USD

2,000 per MT.4

The Africa Mining Vision (AMV) which seeks to build capacity and develop linkages

with other economic sectors is strengthening the mining sector. Promoting linkages

with other productive sectors is conceived as a viable option for the operationalization

of value addition. The linkages are layered in form and accommodate down-stream

linkages with the manufacturing sector; up-stream linkages into mining capital goods

and services industries; spatial linkages into infrastructure and knowledge linkages

into research and local content development.5 Thus, value addition goes beyond

secondary processing of minerals and includes any further activity beyond extraction

with value-added economies.

4 UONGOZI Institute. 2017. ‘Enhancing value Addition in the Extractive Sector in Africa’

https://uongozi.or.tz/wp-content/uploads/2018/11/Enhancing-Value-Addition-in-the-Extractive-Sector-

Africa.pdf

5 Id, at 2

African governments must invest in data and knowledge as prerequisites for national

and sub-regional objectives for development of mineral-based industries and

activities. Policy-making and investment decisions can hardly be made without a

coherent system of available data and information regarding geological,

environmental, market and technological state of the mining sector in any country.

Under a state of resource awareness, state parties become better positioned to

negotiate terms that guarantee developmental impact and value-addition.

African countries must also be willing to make investments in human capital, research

and development as well as support local suppliers and communities to participate in

the value-chain. This is particularly important given that heavy reliance on foreign

direct investments will have negative long-term effects borne out of foreign investors’

minute focus on wealth maximization for the host countries. Linkages with the

knowledge-based sectors must be made for possible training in science and

technology. Also, fiscal incentives must be efficiently deployed to encourage domestic

players and build their capacity against business competitiveness.

International governance reforms must be formulated at a regional and continental

level through the cooperative development of regional and continental –wide policies.

Benefits of cooperation include increases in market size, harmonization of negotiation

terms with foreign investors and enjoyment of economies of scale for both mining

inputs and outputs.

3. CONCLUSION

Africa is poised to take huge future economic benefits from the utilization of her large

mineral reserves; even as demand for various minerals and metals, crucial to the next

generation of industrial activities and powered by a more responsible global attitude

toward climate change, is projected to increase significantly. As the complexity of the

challenges in the extractive sector continues to deepen, rededicating ourselves to the

vision for the African transformation must involve implementing strategies that go over

and beyond the norm to position the continent to become self-sustenance and creating

the higher levels of opportunities for its people.